Apple Inc. (AAPL), Skyworks Solutions Inc (SWKS): Do Not Miss This Smart Way to Benefit From Growth in Connectivity

A vast addressable market

The growth in the number of connected devices around the globe is a huge opportunity for Skyworks as they would require RF and analog solutions that the company provides. It is targeting various end-markets such as automotive, industrial, healthcare, etc. Skyworks is providing the lead reference design for different applications, such as street lighting, telematics, utility metering, etc., to Texas Instruments Incorporated (NASDAQ: TXN) apart from supplying switch modules to various car makers for infotainment consoles.

Moreover, massive growth is expected from the Chinese-smartphone market, where consumers are upgrading from 2G devices to budget smartphones. Skyworks Solutions Inc (NASDAQ:SWKS) has partnerships with well-known local phone makers such as Lenovo, ZTE, Huawei, etc.

As management pointed out on the earnings call, Credit Suisse forecasts that more than 450 million units of smartphones will be shipped by local Chinese vendors this year. Since most of them would probably be 3G devices, Skyworks should see better revenue going forward as 3G phones carry higher-margin content.

The bottom line

Skyworks is not just a smartphone play. Rather, the company is one of the best ways to profit from the growth in connectivity around us. Be it smartphones, cars, connected homes, LTE, GPS, NFC, etc., Skyworks is positioning itself well to derive the maximum benefit out of this boom. The company is aiming to put in $10 to $12 worth of addressable content in each high-end device in the future, and the growth in various connectivity options should aide it in its quest.

Also, with a forward P/E ratio of just 9, $459 million in cash, no debt, and a PEG ratio of just 0.71, I believe Skyworks is worth taking a look at.

The article Don’t Miss This Smart Way to Benefit From Growth in Connectivity originally appeared on Fool.com and is written by Harsh Chauhan.

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